Fletcher Building will use some of the money raised from the sale of its Formica business to run a $NZ300 million buyback once the 2018-19 annual results are released in August.
It also confirmed previous earnings guidance for the year and the proposed payout level from earnings.
The company revealed the plan at an investor day yesterday held in Sydney.
CEO Ross Taylor said the buyback would be done after the remainder of the $1.2 billion from the sale of Formica is used to reduce debt and complete the remaining problem projects in its Building and Interiors division (B+I).
“We have around NZ$600 million of debt that we will repay over the next 12 months. And we have around NZ$250 million of cash outflows to complete the legacy B+I projects, and we remain confident that these projects will be completed within the current provisions,” Mr. Taylor said.
“Based on these factors, we are in a position to distribute up to NZ$300 million to shareholders, with the most effective method being an on-market share buyback.”
Fletcher also confirmed that its dividend policy remains unchanged, “with a targeted payout ratio of 50% to 75% of NPAT (before significant items).
The company said that as previously indicated, the 2018-19 dividend “will be weighted towards the final payment and announced at the Company’s full-year results.”
Fletcher also said it confirmed its previous “FY19 guidance of EBIT (before significant items) of NZ$620 million to NZ$650 million.”
Fletcher shares lost 3.3% on the ASX yesterday to close at $4.92
